Transcript of “The Diamond Empire”

A Frontline show from ten years ago about one of the biggest scams of all time.

EDWARD EPSTEIN, Author, “The Rise and Fall of Diamonds”: Well, what I learned was that the diamond business wasn’t a business of extracting, as I originally expected, something of enormous value and then simply seeing how much of this object you could get out of the ground and selling it. That was what the business appeared to be when I started my venture. But their real business was restricting what came out of the ground, restricting what was discovered, restricting what got cut, restricting what actually found its way into the retail market and, at the same time, through movies, through advertising, through Hollywood, through the manipulation of perceptions, creating the idea that there was this enormous demand for these shiny little objects that they seemed to have in abundant supply. So I wound up on this voyage of discovery starting off with the idea that there was this object of great value, and it was just a question of how many could you get out, and I wound up discovering it was just the opposite.

NARRATOR: This is the story of how that grand illusion was created, and the story of how one family gained control of the world’s diamond trade and for nearly a century has maintained its hold on an empire that defines the very idea of what diamonds really are.

(via Monkeyfilter)

The Atlantic had a great article about DeBeers and diamonds several years back.

Hacking Video Poker Machines

An excerpt from Kevin Mitnick’s “The Art of Intrusion” about some hackers who reversed engineered video poker machines and figured out a flaw in the random number generators which enabled them to beat the house:

We open it up, we take out the ROM, we figure out what processor it is. I had made a decision to get this Japanese machine that looked like a knockoff of one of the big brands. I just figured the engineers might have been working under more pressure, they might have been a little lazy or a little sloppy.

It turned out I was right. They had used a 6809 [chip], similar to a 6502 that you saw in an Apple II or an Atari. It was an
8-bit chip with a 64K memory space. I was an assembly language programmer, so this was familiar.

The machine Alex had chosen was one that had been around for some 10 years. Whenever a casino wants to buy a machine of a new design, the Las Vegas Gaming Commission has to study the programming and make sure it’s designed so the payouts will be fair to the players. Getting a new design approved can be a lengthy process, so casinos tend to hold on to the older machines longer than you would expect. For the team, an older machine seemed likely to have outdated technology, which they hoped might be less sophisticated and easier to attack.

The computer code they downloaded from the chip was in binary form, the string of 1’s and 0’s that is the most basic level of computer instructions. To translate that into a form they could work with, they would first have to do some reverse engineering — a process an engineer or programmer uses to figure out how an existing product is designed; in this case it meant converting from machine language to a form that the guys could understand and work with.

List of Confidence Tricks

From Wikipedia:

The Fiddle Game is a variation on the pigeon drop. A pair of con men work together, one going into an expensive restaurant in shabby clothes, eating, and claiming to have left his wallet at home, which is nearby. As collateral, the con man leaves his only worldly possession, the violin that provides his livelihood. After he leaves, the second con man swoops in, offers an outrageously large amount (for example, $50,000) for such a rare instrument, then looks at his watch and runs off to an appointment, leaving his card for the mark to call him when the fiddle-owner returns. The mark’s greed comes into play when the “poor man” comes back, having gotten the money to pay for his meal and redeem his violin. The mark, thinking he has an offer on the table, then buys the violin from the fiddle player (who “reluctantly” sells it eventually for, say, $5,000). The result is the two con men are $5,000 richer (less the cost of the violin), and the mark is left with a cheap instrument. (This trick is also detailed in the Neil Gaiman novel American Gods and is the basis for The Streets’ song Can’t Con an Honest John.)

The glasses drop
is a scam in which the scammer will intentionally bump into the mark and drop a pair of glasses that have already been broken. He will claim that the glasses were broken by the clumsiness of the mark, and demand money to replace them.

Psychic surgery is a con game in which the trickster uses sleight of hand to pretend to remove bits of malignant growths from the mark’s body. A common form of medical fraud in underdeveloped countries, it imperils the victims, who may fail to seek competent medical attention. (The movie Man on the Moon depicts comedian Andy Kaufman undergoing psychic surgery.)

The Spanish Prisoner scam, and its modern variant, the Nigerian money transfer fraud, take advantage of the victim’s greed. The basic premise involves enlisting the mark to aid in retrieving some stolen money from its hiding place. The victim sometimes goes in figuring he can cheat the con artists out of their money, but anyone trying this has already fallen for the essential con by believing that the money is there to steal.

(Thanks PVC)

On This Day

On this day in 1938, Orson Welles and the Mercury Theater Company broadcasted an updated version of H.G. Wells’ “The War of the Worlds” causing panic amongst listeners who confused the show with real news bulletins:

Many people missed or ignored the opening credits of the programme, and in the atmosphere of growing tension and anxiety in the days leading up to the Second World War, took it to be a news broadcast. Contemporary newspapers reported that panic ensued, with people fleeing the area, and others thinking they could smell the poison gas or could see the flashes of the fighting in the distance.

The author Richard J. Hand cites studies by unnamed historians who “calculate[d] that some six million heard the Columbia Broadcasting System broadcast; 1.7 million believed it to be true, and 1.2 million were ‘genuinely frightened'”. (Hand, 7) While Welles and company were heard by a comparatively small audience (Bergen’s audience was an estimated 30 million), the uproar that followed was anything but minute: within a month, there were about 12,500 newspaper articles about the broadcast or its impact (Hand, 7), while Adolf Hitler cited the panic, as Hand writes, as “evidence of the decadence and corrupt condition of democracy.” (Hand, 7)

Later studies suggested this “panic” was far less widespread than newspaper accounts suggested. However, it remains clear that many people were caught up — to one degree or another — in the confusion that followed.

You can listen to the broadcast here (direct link to mp3) or read the script here.